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GPWA interviews Warren Jolly

We actually completed this interview, along with an interview with Lou Fabiano, several days ago. Unfortunately, due to illness and the sheer length of the interviews, I wasn't able to finish transcribing the conversations until today. The goal of these interviews was to provide answers to many of the questions that affiliates were asking. We hope you find them illuminating.

One of the things that came up this morning regarding CardSpike is Lou said you signed a licensing agreement with CardSpike and you were the owner of CardSpike. What's your reaction to that?

It's completely false. My reaction to that is Lou is taking any step possible to damage my name and incriminate me on this whole issue because he doesn't want to accept any responsibility. The fact of the matter is I'm based here in California and Lou is based in Florida where EMG is based, the company we set up together. This was an initiative that Lou has been wanting to pursue for numerous amounts of years. Obviously we know a lot of people in the industry. A lot of people know who we are in the casino space as affiliates and organizers of CAP, and as I said in my statement, and I'm going to stick to that, the truth of the matter is I'm not going to throw Lou under the bus. I could easily say the same thing back in return and say Lou is the owner, but the actual truth is we finally decided to work with a group of investors on launching this and helping them do what it is they wanted to do and because of our expertise in affiliate marketing and SEO and brand management and everything else, we got involved. Now this was a way for Lou to have a business where he can offer consulting and channel his expertise out of his home base in Florida and it wouldn't conflict with what we're doing here on behalf of Affiliate Media – CAP and PAP out of California – which he really didn't have any control or say over. So it was more of a way to diversify the business, and when you have cooks in the kitchen, if you will, or two chefs in the kitchen, it was easier to have a separate business doing separate things rather than us constantly having differences of opinion on how to run this business here. Lou had always been the community moderator of CAP and running that out of his home in Florida and he'd really been adamant about setting up an office and having something of his own so there wouldn't be this constant back and forth on who makes the final decisions with Affiliate Media, CAP, and PAP. That is the truth. That is the facts. And that can be verified by contacting even Cake Poker directly, who provides the software licensing, and they would be happy to verify that. It's a big, big, major allegation that's completely false and it would be wonderful if Lou could provide some documentation behind that, but it doesn't exist.

When it was first reported by the APCW, GPWA, and in the forums that you and Lou had business interests in CardSpike, both of you vehemently denied it. Why, especially since you admitted it this week, did you deny it, and do you regret those denials now?

This is something that we can provide proof on. We're looking at digging it up right now. But basically, Lou had asked when this whole issue arose for support in denying these allegations. And I vehemently said, “No, I'm not going to take part in that. I don't want to be creating this mess and taking it out to a bigger degree.” We have retained legal counsel, which Michael Corfman is aware of who that is, a lawyer out here in Irvine, and Lou had been in communication with the lawyer; he had asked for my user name and password on CAP. I did not know that he would be making a post that denied allegations. He made a post under my user name, also similarly the post about the Holocaust, anyone that knows how I write in terms of e-mails or posts knows that's not my style. If they take a post or a long diatribe that Lou has written and compare that to the post that was posted under my name – as an example with the Holocaust post – they would clearly make a distinction that was Lou writing under my user name or basically using my account on CAP.

The e-mail that was sent to J. Todd that denied any beneficial interest – was that from you?

The e-mail was from me.

Why did you issue the denial then if you didn't want to be talking that much about it?

This was under Lou's direction – under Lou's advice. The e-mail was from me. I'm not denying that. Some of the posts under my name were made by Lou because the rest of the company, the rest of the organization, the rest of the shareholders, were unwilling to support what he was trying to communicate. As far as sending that e-mail, yes. It was a situation where we had lawyers involved, we had a dispute in terms of how we wanted to come out in public. I apologized in my statement for that denial as well, and when I apologized in my statement, it was referring to my denial via e-mail that was sent to J. Todd.

So essentially, you didn't go public with your roles because Lou didn't want to go public with them but you did, and there was internal dissension?

Yes. As you can see from the new tone at CAP and from the statement and everything else, I greatly believe in transparency. Lou does not. Lou's statement is, and you can quote this, his argument to me was always us having to disclose which companies we owned shares in that were public companies; for example, do we have to tell people that we own shares in GM or we own shares in Mircrosoft or Yahoo! or Dell – does that information need to be public. That would always be his argument to me. And the truth of the matter is I fell for that. I fell for that just being naive, thinking that was the right thing and Lou's my business partner and someone I trust, someone who's much older than I am and experienced, and that was a mistake. And I deeply regret that.

Do you understand why the affiliate community is upset with you regarding the conflict of interest?

Yes. You might even want to speak with one of our employees. There was a meeting that we had here in California when Lou was out here last year between Lou, myself, Lou's wife was there, and one of our employees, John Deng. This was a meeting that we had in the Hyatt Hotel here in Irvine and we had this exact discussion and I said, “Lou, if we get into this business and we work with these groups of people, we can make lots of money with them. It seems like a very appealing thing because the experience we have and how long we've been in this space, but it's going to be a conflict of interest.” And Lou's response to me was, “If you don't do it with me, I'll do it myself and it will still be a conflict anyways, so why would it make a difference?”

What did you do right with CardSpike, what did you do wrong with CardSpike, and what would you redo about the whole thing?

Well, truthfully, there's nothing that I felt that we did right because it's something that we shouldn't have been involved in and that's something that I apologize for. As far as what we did wrong, not serving the community first and foremost. And because we have a certain responsibility to the industry and to the community, what we did wrong is not being public and not even discussing it first and saying, “Hey, would everyone be OK if we consult, or we helped launch these projects – what would be their opinion, what would they want?” What I regret not doing is if we're going to do this, first and foremost get the approval of the community at large and secondly build something that doesn't exist to fill a void.

For the record, what went wrong with CardSpike in terms of the affiliate payments and what took so long to fix it?

Sure. So CardSpike was one of the first Cake products that was basically going to have side games using a casino and unfortunately that was a third-party integration with a completely different group – a large group with over 500 employees. And this was kind of the guinea pig, if you will. So the integration was being done – it was done incorrectly. There was a third-party tracking software, which was Income Access. We basically had Greg Powell, who was the project manager getting this thing..., we left it in his hands. From Day 1 he was working with Cake on getting this up and running. He did not know, nor did he do research or due diligence, that there was a problem with the track and the reporting between the poker software and the casino software. He didn’t inform us, he didn't inform the other parties involved. We didn't really find that out until it came time to issue first affiliate payments. The minute I found out, personally, even that Lou found out, that's when we stepped in and said, “Hey, wait a minute, this is not going to be good.” We know the importance of getting affiliates paid on time. And we were just given promises that hey, it's going to be fixed in two weeks, it's going to be fixed in three weeks. We should be able to have accuracy. And it was just never done because you had this monolithic organization that just couldn't move and didn't realize the importance of ensuring affiliate payments were correct and accurate.

Just for more background, when did you first meet Lou?

Lou and I met first met probably back in 2001-2002 – see, the reason again why I was comfortable with the consulting side is that's where I came from before CAP. I was an outsourced affiliate manager, if you will, for 888 at the time. I was actually running an affiliate network, managing the affiliate program for Tradal, which was again a marketing extension of 888, and recruiting affiliates, had a lot of great relationships with affiliates, and the whole introduction to CAP was CAP was our largest master affiliate at the time. And after we sold the business, at that point me and the other partner, Raj Lahoti. he's also a shareholder in Affiliate Media, CAP was really nothing back then. Lou was the founder. It was a forum, but it was an ugly red and white site that didn't have any value. We both stepped in, but shortly thereafter Raj assumed a silent-partner sort of role. I stepped in and built the business – in terms of the product, the marketing, the relationships, the shows, the magazine, the revenue behind CAP – to what it is today.

How did you divide the business responsibilities with Lou? Who was in charge of what?

Lou was basically, if you will, a division president of anything that had to do with the gaming space. That was his responsibility while I oversaw the actual company as the CEO. We've got other businesses as well in terms of the retail space and lead generation and such. I basically built those from the ground up. Lou's focus has really been to manage the community, manage the product, and kind of be the front person, if you will, for CAP.

Just so you know, Lou views the arrangement completely differently. Lou's view of it is that he was the president, you were the treasurer. You were in charge of sales. He was in charge of the company.

It's a shame that he thinks that. The truth is, and you're a journalist, you can come out to California, you can talk to all the employees of the company and ask them the question who runs the company, who's built the company, who hired you, who you report you, and you'll get 30 to 35 people who'll tell you it's the opposite of what Lou just said. The concern we have as a company is that Lou is doing whatever it is right now to protect his self-interest. A lot of that is concealing the truth with more lies, which is not the approach I'm willing to take.

Along the lines of just trying to clarify information, Lou indicated that you, Raj, and Lou are the owners of Affiliate Media.

That's correct.

Lou said that he had a 40% share, you had a 30% share, and that Raj's shares were nonvoting shares.

That's incorrect.

Lou said that around the time the UIGEA (passed), Raj was involved in another business and he didn't think it would look good to be close to something that involved online gambling so he moved to a nonvoting share position.

That's incorrect.

Along the lines of things that have happened that have annoyed people is the bannings. I know that you've promised a much more open environment and freedom of speech and tolerating different views. But one of the things that Lou is charging is, with Casinomeister for example, Arjun is the guy who banned Casinomeister, that he (Lou) had nothing to do with it and he (Lou) had to "fix the mess" in the morning.

I'm not even going to comment on any of this stuff because it's the same trend of shifting blame and that's not the right way to correct problems and that's not the right way to address the general public and that's not the right way to apologize to the general public and that's not the right way to apologize for actions that have taken place that aren't correct.

One of the things that's happened recently, and you noted this in your statement, is that Lou put up a bank statement.

Yep.

And he's charged that you're embezzling money. And his number is around $3 million. And he's saying the way the corporate bylaws are set up is that any transfer of funds over $25K requires his OK.

Not correct. Any loans of $25K or anything of that sort require that. The funds were simply moved into one of our various corporate accounts to protect from him withdrawing funds. And actually, I have not commented on this publicly, but Lou had prior to all of this happening, when there was a disagreement, had threatened to take money out of the bank accounts, which is why the remaining shareholders and the vice president of finance made a decision collectively to protect the company's assets. And in fact, after all this happened, from one of our accounts, he did indeed withdraw $36,000 out of the branch, which we're now waiting for further copies of the withdrawal slips which we will if needed publish that show that we're pretty much certain that those funds were not put into another corporate account. So in terms of embezzlement or grand larceny or any of those other types of accusations, it's probably wise for anyone to make sure to have proof that the money is going into personal use or being commingled or anything else before making those accusations. Unfortunately Lou, just like everything else he's done thus far to date, has no proof, has no thought behind it. And from our perspective, it's just a joke.

If you were able to talk to Lou directly right now, what would you tell him?

I would tell him for his own sake to stop the public airing of dirty laundry because everyone is quite fed up with it and stop the emotional outcries for pity and support. I think it's gone too far. I've seen on GPWA and Casinomeister that people aren't willing to support that. I would encourage him to issue an apology for everything he's done and work this out with the rest of the company in private so everyone in the industry and shareholders and employees of Affiliate Media and the whole world can move on with their business and respective business.

What lessons have you learned from all of this, and how will you be applying these lessons to your business in the future?

I think the lessons I've learned personally is transparency is critical no matter what anyone says. Trust is critical no matter what anyone says. Conflicts (of interest) should be avoided at all times. And really, just have a good understanding of who your partners are, what their intentions are. I would say that summarizes it pretty well.

A lot of affiliates feel like what's happened here is a gross violation of their trust. And they're trying to figure out if they should trust you again. Why should people be willing to give you a second chance?

I think on this issue actions speak louder than words. And I'm not looking to answer that question with words. I'm looking to answer with action. There’s going to be some things we'll be announcing in the near future, I'm not going to put a date on it. But the key here is a lot of the things that took away the trust over the past couple of years weren't really things – because when you're talking about CAP, you're talking about Lou from the control perspective because that's the way our company has been structured until now – a lot of those things were not under my say, under my control, under my focus because I've been focused on other aspects of the business. I have been the person involved in business development, on the technology side, on the marketing side of CAP, but dealing with the affiliates, whether it's violating the trust or building the trust, it's been Lou's responsibility. And there are some things there that we're looking to change. I'll just give you one example: it's our certification. As I said in my post or statement, I've known, and it's no joke to anyone, our certification has been around for a long time, but as time has passed, it has become less and less authoritative and effective, because it didn't evolve with the times. That's one of the things I'm immediately looking to change. Evolve the certification, make it unpaid, change our whole model, and really make it of value and of trust to affiliates, and keep it independent. These are the kind of things that I'm hoping and the organization is hoping and the community is hoping will rebuild that trust.

What do you want people to know that hasn't already been addressed?

I would just like everyone to keep an open mind toward the new CAP and what's going to happen. Obviously, be in touch with me or the rest of the team if there's any feedback. We'd love to hear it. We want to keep this dialogue open and remain proactive. And again, I'd just like to apologize on the record for what's happened in the past and ensure that going forward in the future that we address those things in the proper fashion and ensure that everyone's happy in terms of the service and value provide.

What's absolutely amazing to me is the fact that neither one of these guys seems to know who is actually in charge of the company. I mean you have to name the officers of the corporation when you implement the actual "Articles of Incorporation". I actually wished the GPWA had of touched on that issue after Warren said what he did, but they were both well done interviews. Thanks for that GPWA.

I can't get beyond the fact Lou owned all these great domains which is worth $$$$$$$$ ,anyone who is into domaining knows that to be true.So this kid comes along and suggests he start making them some money which is great but unless Lou got some serious compensation in the beginning for these domains ,I think the correct thing would be to at least return the domains to him.
I would like them to post the articles of incorporation , When bank accounts are opened for a business the bank gets these papers as well as any conditions on the account.I don't think it is right for any of the partners to effectively clean out the bank accounts to block a partner who owns 40% from having access to any funds.Maybe Lou would have done the same to Warren but that does not make it right for Warren to do that.
If Lou took $36,000 out well He probably considers himself LUCKY he got something before Warren got EVERYTHING.
Sorry but I think both are rats but Lou definitely needs to get his 40% ,Warren has no right to take 100% of the capital from the business and effectively HIDE it from a major shareholder .He looks like the bigger rat IMO.
My husband is CEO of one of our corporations and owns 51% and I own 49% .I run the business and pay the bills then for the 5 seconds a month he pays attention to money he wants to know where it was all spent and see the bank statements.

I own a 60% share of another business with two other partners and even when I have to take money from the business to pay expenses I discuss it with them first.

I can't wait to see the lawsuits ,I sure hope these dockets are Public then we will see who has the best spin on the truth

I can't get beyond the fact Lou owned all these great domains which is worth $$$$$$$$ ,anyone who is into domaining knows that to be true.So this kid comes along and suggests he start making them some money which is great but unless Lou got some serious compensation in the beginning for these domains ,I think the correct thing would be to at least return the domains to him.
I would like them to post the articles of incorporation , When bank accounts are opened for a business the bank gets these papers as well as any conditions on the account.I don't think it is right for any of the partners to effectively clean out the bank accounts to block a partner who owns 40% from having access to any funds.Maybe Lou would have done the same to Warren but that does not make it right for Warren to do that.
If Lou took $36,000 out well He probably considers himself LUCKY he got something before Warren got EVERYTHING.
Sorry but I think both are rats but Lou definitely needs to get his 40% ,Warren has no right to take 100% of the capital from the business and effectively HIDE it from a major shareholder .He looks like the bigger rat IMO.
My husband is CEO of one of our corporations and owns 51% and I own 49% .I run the business and pay the bills then for the 5 seconds a month he pays attention to money he wants to know where it was all spent and see the bank statements.

I own a 60% share of another business with two other partners and even when I have to take money from the business to pay expenses I discuss it with them first.

I can't wait to see the lawsuits ,I sure hope these dockets are Public then we will see who has the best spin on the truth

Warren said why the money was transferred. And it had nothing to do with Warren having the money for his personal use. I can understand why someone might make a decision to move money if someone else that had access to the money threatened previously to take it.

This is the kind of thing that will obviously need to be worked out in private with their lawyers. I'm sure he doesn't owe Lou a straight 40% of the money. It's probably a bit complicated and I'm sure it'll take a little time to work out. Kind of like a bitter divorce. This can't be solved over night, but with attorneys and some time I'm sure they'll come to some kind of settlement.

Lou said himself that he never looked at the monies much. Didn't even look at the statements weekly. So obviously he's not the one that was paying the expenses and managing that. So whoever is paying those things needs to have control of the money so the business can keep going until this matter is settled. IMHO

Originally Posted by Warren

Not correct. Any loans of $25K or anything of that sort require that. The funds were simply moved into one of our various corporate accounts to protect from him withdrawing funds. And actually, I have not commented on this publicly, but Lou had prior to all of this happening, when there was a disagreement, had threatened to take money out of the bank accounts, which is why the remaining shareholders and the vice president of finance made a decision collectively to protect the company's assets.

Originally Posted by Lou (Professor)

Unfortunately, shame on me, but I depended on shareholder agreements to monitor the income and outflow of the cash flow over the years and I didn't look at individual bank statements. Even though I'm a signatory on all the accounts, I would check them periodically just to spot check them to see how the money was doing in the bank. I didn't check them daily, I didn't even check them weekly.

Great work a great interview as a couple of people have said it is good to hear both sides of a story, very weird that cant agree to who owns the company, one thing that came in Warrens wa sthe stoy of the hotel meeting with Warren, John Lou and his and the fact that they could make lads of money, i woul dlove to see Lou comment on that......

I assume that as Lou is allowed to post on the forum both Warren and teh GPWA would not have an issue with Lou posting his comments to the interview???

I have to great work guys and good to see Warren is try to be 100% transparent.

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For someone who didn't want to throw anyone under the bus, he did an awesome job of it with both Lou and Greg.

I know Greg had signed a confidentiality agreement. I'd say that Warren just breached it.

Warren also opened the door for comment from Cake and Income Access. Let's hear what they have to say.

He pretty much managed to shift the blame for everything that was wrong at CAP and Cardspike onto everyone but himself. Sound like someone who wants to be transparent, open and honest?

GPWA: For the record, what went wrong with CardSpike in terms of the affiliate payments and what took so long to fix it?

Sure. So CardSpike was one of the first Cake products that was basically going to have side games using a casino and unfortunately that was a third-party integration with a completely different group – a large group with over 500 employees. And this was kind of the guinea pig, if you will. So the integration was being done – it was done incorrectly. There was a third-party tracking software, which was Income Access.We basically had Greg Powell, who was the project manager getting this thing..., we left it in his hands. From Day 1 he was working with Cake on getting this up and running. He did not know, nor did he do research or due diligence, that there was a problem with the track and the reporting between the poker software and the casino software. He didn’t inform us, he didn't inform the other parties involved. We didn't really find that out until it came time to issue first affiliate payments. The minute I found out, personally, even that Lou found out, that's when we stepped in and said, “Hey, wait a minute, this is not going to be good.” We know the importance of getting affiliates paid on time. And we were just given promises that hey, it's going to be fixed in two weeks, it's going to be fixed in three weeks. We should be able to have accuracy. And it was just never done because you had this monolithic organization that just couldn't move and didn't realize the importance of ensuring affiliate payments were correct and accurate.

The interview sure helped me to understand more about the affiliate program. With the questions answered directly to what I supposed to know enlightened my enthusiasm about signing up for any affiliate programs. Thanks a lot.

What's absolutely amazing to me is the fact that neither one of these guys seems to know who is actually in charge of the company. I mean you have to name the officers of the corporation when you implement the actual "Articles of Incorporation".

This is really amazing. Didn't they prepare annual balance sheets, pay any corporate tax ... all things any entity resembling a company has to do, I think in any country, even in a 'banana republic'???

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If they take a post or a long diatribe that Lou has written and compare that to the post that was posted under my name – as an example with the Holocaust post – they would clearly make a distinction that was Lou writing under my user name or basically using my account on CAP.

Yes, I do see that quite clearly. Lou uses some unique expressions and has a unique writing style and approach.

Vin you did an awesome job and I thank you and GPWA for that, but I am not going to say thanks because of the amount of BS coming from Warren. I also think the same with Lou's comments

*Its very easy for two people to comment without having to answer to affiliates. Both of these guys are total dicks and both of these guys still owe affiliates money.Why dont you have a full out conversation with the people you screwed Warren instead of hiding like a coward and throwing others under the bus.*

It makes me wonder if they really were running a completely legit business because if they were following standard business practices set up for corporations nobody would be able to shift that much cash without the other.I also thing there are many pieces of the puzzle still missing for us to have an accurate idea of what relaly is the truth.

I also thing there are many pieces of the puzzle still missing for us to have an accurate idea of what relaly is the truth.

Not that we will know what happened with Lou and Warren but Greg and Jeremy will be discussing it on the radio show this afternoon ...so hopefully Greg can fill us in on some things given Warrens attempt to throw him under the bus. Here is the link for anyone who wants to listen and there is a chat room if you want to ask questions

We will be back on the air today at 4:00 EST. On the docket for today's show we will be discussing all the latest industry news including but not limited to the never ending saga surrounding CAP, PAP, Cardspike, etc.

I think it's time to put the screws to my esteemed colleague Gpowell and get his take on the whole situation. I suppose what is comical to me is that both Greg and I know 100% of the entire story surrounding everything yet we have been sitting on the sidelines for months and basically not saying anything.

If there are any other topics you guys want discussed, speak now or forever hold your peace!